Following months of negotiations among lawmakers and real-estate professionals, the legislature passed amendments to three property laws last week to promote the registration of real-estate transaction prices in a bid to make the real-estate market more fair.
However, the negotiations and debates over the amendments were rushed, with the amendments passing just two days before the legislative body went into recess ahead of next month’s elections. However, despite the changes, no one can be sure when real-estate taxes might actually be based on real transaction prices to help curb rampant property speculation.
Indeed, the revisions of the Real Estate Broking Management Act (不動產經紀業管理條例), the Land Administration Agent Act (地政士法) and the Equalization of Land Rights Act (平均地權條例) are a first step in enhancing transparency in the real-estate market.
This is because the amendments require that land administration agents, real-estate buyers and real-estate brokers register the value of property transactions within 30 days of a deal closing. If the parties involved fail to do so or register inaccurate prices, they will be subject to a fine of between NT$30,000 and NT$150,000, according to the amendments, which are scheduled to take effect in July next year.
However, since the amendments state that registered real-estate prices cannot be used as a basis for levying taxes until after relevant laws have been revised and complementary measures put in place, it remains to be seen when and how these amendments will really start combating property speculation.
The most important question for the government is how to proceed from here. The government said it would seriously consider taxing real estate on real transaction prices once a comprehensive databank on transactions has been established, but when will that be possible — five or 10 years from now?
Another issue facing the government, and the public as well, is that although the revisions require the relevant parties to register the actual transaction prices of real estate, they are not the prices disclosed to the public, which are an average of prices for housing units or plots of land within a specific area.
The government and lawmakers have attributed the decision to only disclose average housing prices and average land prices to privacy concerns, but this still creates a transparency problem and will undoubtedly undermine the public’s expectations for fairer prices.
Furthermore, buyers of pre-sale housing units will be disappointed at the government’s failure to improve fairness in the real-estate market because, under the revised laws, real-estate brokers are required to register the actual value of property transactions within 30 days of “their contracts with land developers or construction companies” being closed, rather than within 30 days of “deals” being closed, as stipulated for non-presale projects.
In other words, it will still be hard for the public to find out the real transaction prices of pre-sale housing projects, at least until the expiration of the contracts between the brokers and the developers. As prices of pre-sale homes are subject to market speculation more than those of existing homes, this difference in legal definition has left a lot of room for brokers and construction firms to disseminate false market information to the public.